and the Government would only take it at its bullion value. The clipped money would be accepted in payment of the taxes until May 4, 1696, in advances to Government until July 1st, and would cease to be current after February 1, 1697. The Government undertook to give good money in exchange for bad at the full nominal value of the debased coin; hence the whole of the cost of the recoinage would fall upon the national Exchequer.

...

There was almost a panic in the country when the scheme of the Government was known, and the summer of 1696, when the changes were taking place, was a very critical time, for the new money appeared very slowly and the stock of silver money in the country was so reduced that it was only with extreme difficulty that the ordinary retail business of the country could be carried on. The scarcity of money is noted by Evelyn in his Diary: May 1, 1696.-Money still continuing exceedingly scarce, so that none was paid or received, but was all on trust, the Mint not supplying for common necessaries.. June 11-Want of current money to carry on the smallest concerns even for daily provisions in the markets. Guineas lowered to 22s. and great sums daily transmitted to Holland, where it yields more, and other treasure sent to pay the armies, and nothing considerable coined of the new, and now only current, stamp, cause such a scarcity that tumults are every day feared, nobody paying or receiving money." According to the account given by Macaulay, "the manufacturers generally contrived, though with extreme difficulty, to pay their workmen in coin. The upper classes seem to have lived to a great extent on credit. Even an opulent man seldom had the means of discharging the weekly bills of his baker and butcher. A promissory note, however, subscribed by such a man, was readily taken in the district where his means and character were well known. The notes of

the moneychangers of Lombard Street circulated widely, and the paper of the Bank of England did much service." It was a period of great anxiety for the Government, but as it was a quiet time in other respects and nothing happened to disturb public confidence, the crisis passed off more quietly than had been expected. A free use was made of cheques and credit; Government securities were issued, known now as Exchequer bills, bearing interest at the rate of 3d. a day on £100, and, as the new money was gradually issued and put into circulation, the tension subsided.

During this period debased money was brought in to the value of £4,000,000, and it was found that almost the whole of this money had been coined between the reign of Edward VI and 1662, a proof that practically all the money coined since that date by the new method of the mill and screw had been melted down or exported. New silver money was coined to the value of £6,882,908; thus there was a loss of over £2,000,000, and the total cost of the recoinage to the Government has been reckoned at not much under £3,000,000-an enormous sum, taking into consideration the fact that the ordinary revenue of the country at that time did not amount to more than £2,000,000.

A reduction in the silver value of the guinea took place simultaneously with the reformation of the currency. Some alarm had been felt at the prospect of a sudden fall, and a petition was sent in to the Government by the butchers, graziers, etc., of Smithfield Market, on the ground that they still held many guineas which they had received as the equivalent of 30s. each, and that a sudden change in the value would ruin them. The reduction was consequently gradual; in February, 1696, the guinea was reduced from 30s. to 28s., and then fell by successive steps until by April 22nd it was fixed at 22s.

The effect of the restoration of the currency was satis

factory for the moment; public confidence was restored, the foreign exchanges turned in favour of England, and money began to come into the country again. "The merchants in fact saw that the balance of trade was so much turned on our side that whereas we were wont to carry over a million of our money in specie, we then sent no money to France and had at least half that sum sent over to balance the trade" (Burnet). Yet the events of the eighteenth century were to show that, although the Government had carried through with apparent success a task of enormous difficulty, it had effected no permanent settlement of the currency, and difficulties from the scarcity of silver soon began again.

CHAPTER VII

THE COINAGE IN THE EIGHTEENTH CENTURY

VERY little change was made in the coinage in the eighteenth century. The only gold coins struck were the guinea and half guinea, and after 1717 they exchanged for 21s. and Ios. 6d. respectively and were valued unalterably at these figures. The last guineas were struck in 1813, and after that the guinea remained only as a money of account and its place in the currency was taken by the sovereign, which was current for 20s. and weighed a little over 1231 grains. Gold coins valued at 7s.—the third of a guinea—were struck by George III, and a few £2 pieces by George IV, but with these exceptions the sovereign and half sovereign have been since 1813 the only gold coins in circulation. Throughout the eighteenth century no change was made in the silver currency, and the coins issued remained as before :-5s., 2s. 6d., Is., and 6d. At the end of the reign of George II, when the silver coinage was scarce and in an unsatisfactory condition, Spanish dollars of the value of 5s. were accepted by the Mint and reissued countermarked with the head of the King, and in 1804 silver coins to the value of 3s. and Is. 6d. were struck, but these were only temporary experiments. The copper coinage of the eighteenth century consisted of halfpence and farthings. Quite at the end of the century, in 1797, copper coins to the value of 2d. and id. were struck, but the twopenny pieces, being found to be

too large and heavy for convenience, were soon discontinued and for a time there was a return to tradesmen's tokens.

The eighteenth century was a time of difficulty in currency questions because gold was still overrated, for the reform of 1695 had been carried out on the principle of retaining the old standard, whilst the gold mines of Brazil were now being extensively worked and the market value of silver relatively to gold was advancing. Locke's advice had been to bring down the guinea until the Mint ratio between gold and silver was the same as the market ratio, but the Government only partially carried out his plan. The guinea had been lowered in value, but not sufficiently. Gold was still overrated with regard to silver as judged by the continental standard, and consequently the new silver coins began to leave the country, the influx of gold going on all the more rapidly because there was now a large supply of good silver coins which could be sent abroad to pay for it. By October, 1696, it was found necessary to pass a law checking the importation of gold, and it was also ordered by proclamation, as there was so much foreign gold current in the country, that the pistole and the louis d'or should not pass current for more than 175., an order which had the effect of bringing them at once to the Mint.

In 1698 the guinea was reduced from 22s. to 21s. 6d. The ratio between gold and silver was now 15:1, whilst in France and Holland it was 15: 1; and, though it was known that gold was still overrated, it was thought by the Council of Trade and Plantations that the charges. for insurance and freight would counterbalance the difference and that "the present disproportionate increase of gold" would be checked. They were, however, mistaken, for, as the guinea at 21s. 6d. was still rated above its bullion value, it was more profitable to pay for goods in gold in England and in silver abroad, and so the full